Homebuyers: Avoid These Common Mortgage Pitfalls

Marci • December 12, 2018

A home is the largest purchase most people will make in their lives.

That should reinforce the importance of planning ahead, doing your research, relying on the advice of experts and not rushing through the process.

With nearly 700,000 homes purchased in Canada each year, there’s no shortage of anecdotes about the issues and surprises that can arise.

While a mortgage broker can help you avoid many of the pitfalls commonly encountered during the home buying process, it’s still important to be informed even before you start looking for that perfect home. Here are just a few examples:

 

1. Not checking your credit report before applying for a mortgage

Put simply, not knowing your credit score prior to applying for a mortgage is akin to not brushing your teeth before visiting the dentist.

Your credit score can have a huge impact on the best rate you’ll be able to secure. For example, some lenders will offer a borrower with a 640 credit score rates that are a full 0.25% worse than someone with a score of 750, as we’ve  written about  previously on these pages. For conventional mortgages (those with down payments of less than 20%), the ideal target score is around 720.

You don’t want to discover your credit score is sub-par in the middle of a mortgage application. Knowing this information beforehand gives you time to improve your score, or address any errors that may appear on your report. You can easily check your score through  Equifax  or  TransUnion.

Anyone with a credit score less than 680 (the minimum credit score to get the best rates) should be prepared to pony up for a higher interest rate and will likely qualify for a smaller mortgage.

 

2. Thinking it’s all about the rate

Let’s be honest, who doesn’t want the cheapest mortgage rate possible? And indeed it is important to find the best deal that meets your needs. After all, a few percentage points can make a not-insignificant difference to your interest costs over your mortgage term.

But don’t be too quick to jump at the cheapest rate without making sure it has all of the features you need/want, and that it doesn’t stick you with higher-than-normal penalties should you need to break your mortgage early. Some people are OK with a large penalty if it saves them money upfront on the rate. Just remember that penalties on certain “no-frills” mortgages can end up costing  many  thousands of dollars, nullifying any rate savings.

 

3. Not understanding the importance of the down payment

Many first-time buyers see a down payment as a big, almost-insurmountable obstacle to home ownership, particularly in regions where prices have skyrocketed into the stratosphere.

But when you get into the nitty-gritty of it all, there are many more considerations beyond simply coming up with the money.

Things to consider:

  • How big of a down payment will you/can you make? Of course you must meet the federally mandated minimum down payment: 5% for all mortgages up to $500,000, and 10% on any portion above $500,000 up to $1 million (CMHC-insured mortgage loans are only available on properties valued under $1 million). It goes without saying that as you increase the size of the down payment, you reduce the amount of interest over the lifetime of the mortgage. But you also reduce the size of the  CMHC mortgage insurance premium , which runs from 0.60% on loan-to-values up to 65%, all the way up to 4% for loan-to-values of 95% (i.e. 5% down). CMHC says the average down payment in 2016 was 8%, while the average CMHC-insured loan was $245,000. Based on those figures, the average premium was $9,016. Remember, this premium is normally rolled into the mortgage, and gets paid off (with interest) over the life of the mortgage.
  • The source of your down payment funds. According to Mortgage Professionals Canada, about 10% of first-time buyers use the federal government’s  Home Buyer’s Plan  to withdraw up to $25,000 tax free from their Registered Retirement Savings Plan (RRSP). This can be a great tool for supplementing a down payment, so long as you’re aware of the rules and the payback requirements.
  • Transferring the funds. No matter where your down payment funds are coming from (savings, investments, RRSP, proceeds from a prior sale), be sure to leave yourself plenty of time for the funds to clear and for a certified or cashier’s cheque to be produced before the closing. It’s easy to underestimate the time it may take for wire transfers to finalize, so be sure to confirm with your bank or financial institution in the event of a tight deadline.

 

4. Not setting (and sticking to) a budget

You’re probably thinking, “but budgets can be boring and tedious.” This is not entirely incorrect, but on the other hand a budget paints a clear picture of your financial situation and lays the framework for ensuring you can afford all of the hidden (and not so hidden) costs associated with buying a home—not to mention all of the costs that follow after the closing.

It’s important to plan for both the short and long term. Short-term costs include everything from:

  • Land transfer taxes
  • Legal fees
  • Home inspection/appraisal fees
  • Down payment (this is kind of a big one)
  • Mortgage insurance (remember, the provincial tax on your insurance premium can’t be rolled into the mortgage like the premium itself, so expect this hefty expense at closing time)

Then there are the ongoing costs of home ownership. Previous owners will know what to expect, but first-time buyers may be caught off guard with sudden expenses after moving in, such as:

  • Appliances and furniture
  • Condo fees/Property taxes/Property insurance
  • Utility costs
  • Renovations/repairs (furnace replacement, new shingles, etc.)
  • And everything else, down to tools, and yes, even a dehumidifier. These expenses can add up

As for long-term planning—and this applies especially to today’s buyers—just because you scored a great rate for your purchase, be prepared for the possibility that rates will rise and that you may need to renew into a higher rate in the future.

For every 25 bps or rate increases, adjustable-rate holders can expect to pay approximately $25 more in interest each month based on a $200,000 mortgage.

 

5. Not Shopping Around

Whether you plan to find your own mortgage or enlist the help of a broker, it’s still important to shop around in both cases.

Most people don’t buy the first car they test drive. They give themselves adequate time to research and compare their options. So why would a purchase worth many times the cost of your vehicle be any different?

If you have questions about any of these issues, or about the mortgage application process in general, I’d love to discuss it with you. Please don’t hesitate to contact me anytime!

 

This article was written by Steve Huebl from Canadian Mortgage Trends. It was originally published here on July 21,2017. 

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How to Get a Mortgage for a Second Property

By Marci Deane • January 14, 2026
Thinking About Buying a Second Property? Here’s What to Know Buying a second property is an exciting milestone—but it’s also a big financial decision that deserves thoughtful planning. Whether you're dreaming of a vacation retreat, building a rental portfolio, or looking to support a family member with a place to live, there are plenty of reasons to consider a second home. But before you jump in, it's important to understand the strategy and steps involved. Start with “Why” The best place to begin? Clarify your motivation. Ask yourself: Why do I want to buy a second property? What role will it play in my life or finances? How does this fit into my long-term goals? Whether your focus is lifestyle, income, or legacy planning, knowing your “why” will help you make smarter decisions from the start. Talk to a Mortgage Expert Early Once you’ve nailed down your goals, the next step is to sit down with an independent mortgage professional. Why? Because buying a second property isn't quite the same as buying your first. Even if you’ve qualified before, financing a second home has unique considerations—especially when it comes to down payments, debt ratios, and how lenders assess risk. How Much Do You Need for a Down Payment? Here’s where the purpose of the property really matters: Owner-occupied or family use: You may qualify with as little as 5–10% down, depending on the property and lender. Income property: Expect to put down 20–35%, especially for short-term rentals or if it won’t be occupied by you or a family member. Your down payment amount can be one of the biggest hurdles—but with strategic planning, it’s often manageable. Ways to Fund the Down Payment If you don’t have the full amount in cash, you might be able to tap into your current home’s equity to help fund the purchase. Here are a few ways to do that: ✅ Refinance your existing mortgage to access additional funds ✅ Secure a second mortgage behind your current one ✅ Open a HELOC (Home Equity Line of Credit) ✅ Use a reverse mortgage (in certain age-qualified scenarios) ✅ Take out a new mortgage if your current home is mortgage-free These options depend on your income, credit, home value, and overall financial picture—another reason why having a pro in your corner matters. Second Property Strategy: It’s More Than Just Numbers This purchase should be part of a bigger financial plan—one that balances risk and reward. It’s about: Assessing your full financial health Maximizing your existing assets Minimizing your cost of borrowing Aligning your purchase with your long-term goals Ready to Take the Next Step? There’s no one-size-fits-all answer when it comes to buying a second property. That’s why it helps to talk things through with someone who understands both the big picture and the small details. If you’re ready to explore your options and build a plan to make that second property dream a reality, let’s connect. I’d love to help you take the next step with confidence.

What Is a Cashback Mortgage and How Does It Work?

By Marci Deane • January 7, 2026
Cashback Mortgages: Are They Worth It? Here’s What You Need to Know If you’ve been exploring mortgage options and come across the term cashback mortgage , you might be wondering what exactly it means—and whether it’s a smart move. Let’s break it down in simple terms. What Is a Cashback Mortgage? A cashback mortgage is just like a regular mortgage—but with one extra feature: you receive a lump sum of cash when the mortgage closes . This cash is typically: A fixed amount , or A percentage of the total mortgage , usually between 1% and 7% , depending on your mortgage term and lender. The money is tax-free and paid directly to you on closing day. What Can You Use the Cashback For? There are no restrictions on how you use the funds. Here are some common uses: Covering closing costs Buying new furniture Renovations or home upgrades Paying off high-interest debt Boosting your cashflow during a tight transition Whether it’s to help you settle in or catch up financially, cashback can offer a helpful buffer— but it comes at a cost . The True Cost of a Cashback Mortgage Here’s the part many people overlook: cashback mortgages come with higher interest rates than standard mortgages. Why? Because the lender is essentially advancing you a small loan upfront—and they’re going to make that money back (and then some) through your mortgage payments. So while the upfront cash feels like a bonus, you’ll pay more in interest over time to have that convenience. Breaking Down the Numbers It’s hard to give a blanket answer about how much more you’ll pay since it depends on: Your interest rate The cashback amount The mortgage term Your payment schedule This is why it’s important to run the numbers with a mortgage professional who can help you compare this option with others based on your personal financial situation. Are You Eligible for a Cashback Mortgage? Not everyone qualifies. Cashback mortgages generally come with stricter requirements . Lenders often want to see: Excellent credit history Strong, stable income Low debt-to-income ratio If your mortgage file includes anything “outside the box”—like being self-employed or recently changing jobs—qualifying for a cashback mortgage might be tough. What If You Need to Break the Mortgage? This is one of the biggest risks with cashback mortgages. If your circumstances change and you need to break your mortgage early, you could be on the hook for: Paying back some or all of the cashback you received, and A prepayment penalty (typically the interest rate differential or 3 months’ interest—whichever is higher) That can be a very expensive combination. So if there’s even a chance you might need to sell, refinance, or move before your term is up, a cashback mortgage might not be the best fit. Should You Consider a Cashback Mortgage? Maybe—but only with eyes wide open. Cashback mortgages can be helpful in the right scenario, but they’re not free money. They’re a lending tool that benefits the lender , and the key is knowing exactly what you’re agreeing to. Final Thoughts: Talk to an Expert First Choosing the right mortgage isn’t just about the lowest rate or the biggest perk—it’s about making a choice that fits your whole financial picture. If you’re considering a cashback mortgage, or just want to explore all your options, let’s talk. As an independent mortgage professional , I can help you weigh the pros and cons of various products, so you can make a confident, informed decision. Have questions? I’d be happy to help—reach out anytime.

Getting a Mortgage Shouldn’t Be Stressful—We Can Help

By Marci Deane • December 31, 2025
Buying a Home? Follow These 6 Key Steps for a Smooth Experience Buying a home is likely one of the biggest financial decisions you’ll ever make. It’s exciting—but it can also be overwhelming, especially when it comes to understanding how mortgage financing works. To help make the process smoother (and far less stressful), here are six essential steps every homebuyer should follow: 1. Start With a Mortgage Professional—Not MLS It’s tempting to start your home search by scrolling through listings and booking showings—but the real first step should be speaking with an independent mortgage professional . Unlike a bank that offers only one set of products, an independent mortgage expert has access to multiple lenders and options . That means better advice, better rates, and a better chance of finding a mortgage that truly fits your needs. 2. Build a Personalized Mortgage Plan Unless you’re buying your home with cash, you’ll need a solid financing strategy. That means: Reviewing your credit score Running affordability calculations Exploring different mortgage types, terms, and features Understanding down payments and closing costs The sooner you start planning, the more confident you’ll feel. Don’t wait until you’ve found the “perfect” property— get ahead of the process now . 3. Figure Out What You Can Actually Afford What a lender says you can borrow doesn’t always match what you can comfortably pay each month. Take a close look at your budget, lifestyle, and spending habits. Think about how your mortgage payments, property taxes, utilities, and other costs will fit into your everyday cash flow. Avoid the stress of being house-poor by knowing your real-life affordability , not just your paper pre-approval. 4. Get Pre-Approved the Right Way A true mortgage pre-approval isn’t just entering numbers into an online calculator. It means: Completing a mortgage application Submitting all your required documentation Having a mortgage professional fully assess your file When you’re officially pre-approved, you’ll shop for homes with confidence , knowing what you qualify for and that you’re financially ready. 5. Submit Your Documents Promptly and Stay Flexible Once you find a property and your offer is accepted, time is of the essence. That’s when all the upfront work you’ve done really pays off. Be ready to: Provide additional documentation if requested Respond to your mortgage professional quickly Stay flexible and proactive throughout the approval process Your lender needs to verify everything before finalizing the loan, so staying organized is key. 6. Don’t Make Big Financial Changes Before Closing Once you’ve secured financing and waived your conditions, freeze your finances until after you get the keys. Seriously—don’t: Change jobs Apply for new credit Take out a loan Make a large withdrawal Even small changes can throw off your approval. Keep everything status quo until you officially take possession. Recap: 6 Steps to a Smooth Home Purchase Connect with an independent mortgage professional Create a mortgage plan early Know what you can afford (not just what you qualify for) Get fully pre-approved Stay on top of documentation Avoid major financial changes before possession Ready to Buy with Confidence? If you’re thinking about buying a home—or just want to know what’s possible—let’s talk. I’ll help you map out a personalized plan that makes your homebuying journey feel simple, strategic, and stress-free. Reach out anytime. I’d love to help you get started.